Clive Palmer’s blunt manner of saying what he thinks does not translate well from Australia to China. Is the politician billionaire’s mouth getting him in trouble?

May 30, 201411:47pm

Loud and clear ... Clive Palmer at a breakfast hosted by the NSW Business Chamber at Shangri-La hotel in Sydney. The so-called billionaire is finding communicating with the Chinese somewhat of a challenge.

IN Australian politics, Clive Palmer can say anything he wants. In China, where politics and business are one and the same, the so-called billionaire is playing a riskier game.

There is a chance that the Mineralogy chairman and member for Fairfax could be detained for questioning if he steps foot in China.

That could sink the fabled Titanic II, the replica of which Palmer said would sail from a Chinese shipyard in Nanjing in late 2016. Now it looks to be in its death throes as Palmer desperately searches China for rich sponsors to help get the boat built.

Chances of that may be slim.

Palmer’s reputation has plummeted so far that Shanghai-based Australian businessman Peter Arkell, chairman of the Global Mining Association of China, says: “You could have a meeting in a phone box of the Chinese blokes that might be interested in getting engaged with him.”

According to documents lodged in the Federal Court, Palmer’s company Mineralogy has been accused by CITIC Pacific of siphoning $12m from it to help fund the 2013 Palmer United Party election campaign. The problem for Palmer is that CITIC, which is mining and shipping ore from Palmer’s leases at Cape Preston in the Pilbara, is controlled by the Chinese government.

Palmer’s company has in essence been accused of taking money that belongs to the People’s Republic of China. While the Australian Federal Police have said they will not investigate the allegation of fraud without CITIC filing a complaint, the Chinese government may take a different view.

Palmer’s spokesman said the allegations regarding CITIC “are not even being investigated by any relevant authorities”. He said that there was a court process afoot and didn’t wish to prejudice it.

Dr Dongyi Hua, the former executive chairman of Citic Pacific Australia, and who calls Palmer “Mr China”, because he says that’s what Palmer calls himself, was asked if Palmer would be at risk if he entered China.

“Anything can happen,” said Hua. “Mr China may well worry about (going to) China. If the government is angry with someone, they will never leave a message saying, ‘I’m angry with you’.

“They will say, ‘You are welcome.’ And bang — they are waiting.”

Palmer did not respond when asked if he feared being detained, or whether he had travelled to China in recent times. He was not one of the 700 Australian executives who Tony Abbott led to China in April.

Seismic shock ... Australian tycoon Clive Palmer’s exploration activities off Papua New Guinea have been called into question.Source:AFP

He also needs to be careful in his dealings with Papua New Guinea, which disputes his claim at a press conference last year that he had since 2012 spent $50m undertaking seismic work on his three offshore gas leases close to Port Moresby.

Palmer likened his leases in the Gulf of Papua as potentially equal to the North-West Shelf and Kuwait, saying they were “confirmed one of the world’s largest natural gas fields”.

That has not been confirmed, because the leases have never been drilled.

“You can only confirm a gas reserve upon discovery,” said a highly placed source in the PNG government, who said Palmer’s statements that he had spent $50m in seismic work were not believed.

“It doesn’t make logical sense. It’s a very wild, wild claim.”

Palmer’s every move and statement is now subject to close scrutiny in Australia, where his Palmer United Party is set to control the balance of power in the Senate come July. He clearly enjoys being courted by the Coalition, which needs him to help pass its tough budget reforms.

Palmer has been dined by Communications Minister Malcolm Turnbull and fellow Queenslander, Senate leader and Attorney-General, George Brandis, who want him to relax his man-of-the-people facade and help them with some of the Liberal policies he once claimed to love.

While the feds are frightened of getting him further off-side, the Queensland and WA state governments openly despise him. Palmer’s suing Campbell Newman for defamation for alleging Palmer had tried to buy his Queensland government, and saying Palmer had gone around the country enticing serving politicians to the PUP.

WA Premier Colin Barnett said this week that Palmer’s legal disputes with CITIC Pacific over royalties he claims he’s owed — along with the court claims about the missing $12m — had damaged Australia’s relationship with China.

“To put it bluntly, the Chinese hate Clive Palmer,” Mr Barnett told the ABC. “In their view, and I think they are right, he’s taking unfair advantage of an agreement ... and he is trying to get more money out of them than was originally negotiated.”

Peter Arkell disagrees with Barnett’s assessment that China will see Palmer as a reflection of all Australian businesses. “I think Clive Palmer does more damage to himself than he does the Australian economy,” he says.

Arkell says the Australian projects Palmer wants to develop, such as the long-delayed Balmoral South project, which neighbours CITIC Sino Ore Project in the Pilbara, and the Galilee Basin gas project in Queensland, for which he has obtained approval, are never going to happen without Chinese investment.

With his Queensland Nickel mine reportedly losing money, a $7m carbon tax bill from the mine recently paid (but with another $2.27 overdue), and his Coolum dinosaur resort reportedly failing to fill rooms, it is not surprising Palmer was this week keen to take up Turnbull’s invitation to dinner.

In his capacity as chairman of Blue Star Line, which wants to build Titanic II, Palmer earlier this month announced the signing of a Memorandum of Understanding with AVIC Kaixin Ship Industry Co Ltd, which is headquartered in Singapore.

Mr Palmer said: “AVIC will assist in promoting the Titanic II and short-listing sponsors from mainland China on behalf of Blue Star Line.”

The language of “short-listing” sponsors carries the suggestion Palmer will select preferred financial backers from a long queue lining up to invest. But with no work on the boat yet started, a more realistic interpretation is that Palmer’s project has stalled.

Palmer’s claims and reality are two different things.

This is a statement on his Queensland Nickel Group website: “In Papua New Guinea and on the North West Shelf of Western Australia, Palmer Petroleum is a leading explorer for oil and gas.”

Palmer Petroleum is not a leading explorer in either WA or PNG. He has a 35 per cent share in one barely active NW Shelf permit known as WA-361-P.

In 2008, before he was a household name, Palmer did a deal with the permit operator, MEO Australia Ltd, which was announced with great fanfare.

MEO said it had entered a “major strategic alliance” with “Professor Clive Palmer”, whose Resource Development International Ltd was at that time planning to raise $5bn on a company float to be listed on the Hong Kong and Australian stock exchanges.

Palmer’s company never did raise that $5bn.

In return for his 35 per cent share, Palmer paid close to $30m to drill one hole, called Zeus 1. In 2009, Zeus 1 was found to be dry. No further drilling has occurred on the lease.

As for his $50 million spent on his PNG leases, the PNG source said: “The PNG government is aware of his claims, but there is no sign of geological activity since he acquired that permit, at sea or aerial for that matter.

“To date he has not put in a drill nor submitted quantifiable realistic survey data to justify his public claim that he has done public work in PNG worth $50m.”

Furthermore, he said Palmer had not fulfilled his reporting obligations to PNG of any exploratory work on the leases and that his leases, along with other companies’ that they believed were lying fallow, were now subject to review.

Palmer claimed a seismic company called Robertson, a subsidiary of UK-based CGG, had undertaken the seismic analysis.

Shipping news ... Scenes around the Jinling Shipyard where Clive Palmer says he is building the Titanic II.Source:News Limited

CGG would not comment on any work it had done for Palmer, but the PNG government source said they believed Palmer had only paid for the reprocessing of seismic information obtained by a former leaseholder.

“I think he’s playing on old data,” said the source. “It’s desktop speculation.”

Palmer did not return calls but a spokesman, pressed on whether he reprocessed old data, and how that could have cost $50m, said: “He spent $50M on the studies.”

As for Palmer’s claim the leases had been “confirmed” as among the world’s largest, Greg Anderson, from the PNG Chambers of Mines and Petroleum, said: “It’s an unknown area. It’s to the east of some known discoveries. Oil Search and Total did some research nearby and they didn’t have gas that is commercial.”

Early this year, at a National Press Club appearance, Palmer’s attendance came with this recycled biographical excerpt, which can be classified either as a straight falsehood or serious clerical error:

Woodside confirmed in a statement to News Corp that getting an MOU, and a deal, were two different things: “Please note that the MOU was not translated into a sales agreement.”

Questions about this claim from Palmer, and others, were mostly ignored by Palmer’s media person, who advised News Corp to check Palmer’s media releases.

It’s easy to make claims when your company is private and not answerable to shareholders, though Palmer came off second best in a 2012 boardroom shootout for control of Central Petroleum, which pulls oil from the Palm Valley region of Central Australia.

Palmer wanted to stop Richard Cottee — who joined Queensland Gas Company in 2002, having taken it in six years from a $30m company to $5.75bn — from taking control in favour of his preferred managing director, John Heugh.

Central Petroleum had huge tenements but had no money to drill. There were questions of what Palmer, as the major shareholder with 4.8 per cent, intended with Central.

He bought Queensland Nickel in 2009 from BHP as a going concern and had no track record of mining start-ups, unless bringing in a joint-venturer to do the digging, as with CITIC Pacific.

In this case, Cottee fought Palmer with a grassroots campaign to convince the majority of mum and dad shareholders that he could get Central going. He campaigned on Palmer’s record, arguing he would be unlikely to attract major companies to joint venture.

Tumultuous future? Clive Palmer during Question Time in the House of Representatives in Parliament House, Canberra. His party is set to take the balance of power in the Senate. Picture: Gary RamageSource:News Corp Australia

By that stage, word was already out about Palmer’s problems with CITIC. The shareholders voted overwhelmingly in favour of Cottee and within months he had signed up two super-majors, Santos and Total. This year, they started pumping oil.

The question of the wisdom of doing business with Palmer now looms stark in China, for which Palmer claims an affinity that began as a small boy, when he said his father sat him on the knee of Chairman Mao.

Asked if he believes the Mao story, Dr Hua, who was sent to oversee China’s interests in the Sino Ore Project, to make sure the $8bn it has ploughed into infrastructure was kept on track, says: “No. I never believe that. He tells lots of stories and after one second he’s forgotten it.”

When Hua was at CITIC, his Perth office copped some incredible sprays from Palmer — including one that was recorded of him suggesting the CITIC chairman to stick it “up his arse” and: “I’ve had enough of you so just pack up all your f***ing gear and get back to China.”

Hua said that Palmer “always makes the problems. Now, less and less Chinese companies want to keep relationships with Palmer.”

CITIC and Mineralogy are now in confidential arbitration meetings to sort out their differences. Despite the legal actions that Palmer has initiated, CITIC is forging ahead, despite a failed attempt by Palmer to have a WA court wind up the project.

“There is no choice now,” says Hua, who says project will benefit both sides. “If

he’s not crazy, he should have reached an agreement. Maybe some money makes some people crazy.”

CITIC Pacific is China biggest mining investment in Australia, and groundbreaking in that they came as a mining operator, not just a buyer of minerals.

The bizarre thing about Palmer’s battle with CITIC is that the Pilbara project is thought to be his only potential source of real income, apart from his base rate parliamentary salary of $195,130.

“If there was decision that CITIC Pacific could take back, it would probably been who their partner would have been,” said Peter Arkell.

“But I don’t think the behaviour of Clive Palmer has had a negative effect on China’s desire to invest in Australia’s mining industry. If anything, it has brought to their attention how diligent they need to be in assessing their partners. No one would want another partner like Clive Palmer.”

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